Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/28019
Authors: 
Bester, Helmut
Year of Publication: 
2005
Series/Report no.: 
Diskussionsbeiträge des Fachbereichs Wirtschaftswissenschaft der Freien Universität Berlin 2005/21
Abstract: 
This paper views authority as the right to undertake decisions that impose externalities on other members of the organization. When only decision rights can be contractually assigned to one of the organization's stakeholders, the optimal assignment minimizes the resulting inefficiencies by giving control rights to the party with the highest stake in the organization's decisions. Under asymmetric information, the efficient allocation of authority depends on the communication of private information. In the case of multiple decision areas, divided control rights may enhance organizational efficiency unless there exist complementarities between different decisions.
Subjects: 
Authority
Decision Rights
Externalities
Incomplete Contracts
Imperfect Information
Theory of the Firm
JEL: 
D23
D82
L22
P14
ISBN: 
3938369205
Document Type: 
Working Paper

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